Financial Quotient

What is capital gain?

Capital gain is an important component of the total return of an investment.
Capital gain is an important component of the total return of an investment.PHOTO: REUTERS

Capital gain refers to the profit from selling a capital asset (such as property, stocks or bonds), when the selling price is higher than the purchase price.

A capital loss is incurred when the selling price of an asset is lower than its purchase price.

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A version of this article appeared in the print edition of The Sunday Times on November 25, 2018, with the headline 'What is capital gain?'. Print Edition | Subscribe